Shipping profitability

The gap between what customers pay for shipping and what carriers invoice you is one of the most consistent profit leaks in ecommerce — and one of the easiest to close.

The problem

Shipping settings are configured once and then left while parcel prices, fuel surcharges, remote-area fees and product dimensions all change.

A free-shipping threshold set when your average parcel was small will send heavy orders out at a loss for years.

How to measure it

Per order: shipping revenue − actual carrier cost (from invoices, including all surcharges) − packaging.

Find the share of orders shipping below cost and which products appear in them.

Recalculate the free-shipping threshold against contribution, not against average order value.

What to change

  • ◆Set the threshold above the point where contribution covers the real parcel cost.
  • ◆Charge dimensional or heavy-item surcharges where the product warrants it.
  • ◆Reduce box sizes and re-check dimensional weight banding.
  • ◆Renegotiate carrier rates with your actual volume and parcel profile in hand.

Estimates, not your numbers. Everything on this page is based on public ecommerce benchmarks and the signals a public storefront exposes. It is an indication of where profit typically leaks — not a measurement of your finances. Connect your store to replace estimates with your actual numbers.

Frequently asked questions

How do I know my real shipping cost?+

From carrier invoices rather than rate cards. Surcharges, fuel and dimensional adjustments are usually the difference between the two.

Will raising my free-shipping threshold hurt conversion?+

It can, which is why it should be measured on contribution over a full period rather than on conversion rate alone.

Want to know what's hurting your store's profitability?

Run the free Profit Leak Scan and get your estimated Profit Leak Report: your Profit Leak Score, the estimated share of revenue at risk and your top five leaks with the recommended fix.

Free · No card · Nothing to install · Estimates, not your accounting data

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